Retail is a dynamic industry, offering a mix of online and in-person shopping experiences. There are an estimated 4.2 million retail establishments in the U.S. – from brick-and-mortar shops to online web stores and marketplaces – contributing to 7.7% of the U.S. economy’s GDP. Some have suggested that much of retail’s stamina and growth is due to online sales, especially as the COVID-19 pandemic was predicted to permanently shift consumer behavior. Yet a recent economic study conducted by the Brattle Group reveals online and in-person sales channels compete amongst each other.
Published by the Computer & Communications Industry Association (CCIA), the study found that “online and offline prices are identical 95% of the time for the same product, retailer, location and date.” When one channel’s price changes, the other channel usually changes to match it quickly, highlighting how both channels are subject to the same market forces.
This shows that there’s no dichotomy between digital and physical retail. While some may attempt to put these sales channels in separate boxes and suggest that they are distinct, the data shows they go hand-in-hand. What’s more, the study concludes that if lawmakers were to impose additional regulations that solely target online prices they would affect prices in physical stores as well.
Together, digital and physical sales channels are part of a dynamic and innovative market focused on meeting customers’ desires for convenience, low prices and a broad selection of products. They also give small and medium-sized businesses (SMBs) more opportunities to reach new audiences through omnichannel sales methods and a variety of fulfillment options. Our 2021 consumer survey found that 68% of shoppers prefer retailers that offer both online and in-person shopping; they enjoy having multiple ways to compare prices, make purchases and receive their items.
The bottom line: strong price competition between online and physical channels shows both sales methods have a significant, interconnected stake in the market.